26/04/2021 Salary register and equal pay audit: another business requirement, punishable in this case
More requirements and obligations are increasingly being imposed by Spanish legislators on companies. If the battery of measures published during the COVID-19 period had not been enough, more workload has now been imposed on employers as a result of the publication of Royal Decree 902/2020 of 13 October on equal pay for women and men, which entered into force on 14 April 2021. The Decree sets out the obligation that all companies must keep a salary register, although this has been imposed since 8 March 2019, and that only the companies with an equality plan must have an equal pay audit, which entered into force on 14 April 2021.
The Decree is aimed at both implementing article 28 of the Consolidated Text of the Workers’ Statute (Salary register) and imposing the obligation to conduct an equal pay audit on the companies required to carry out an equality plan.
- Salary register
The Royal Decree sets out measures to make the right to equal treatment and non-discrimination effective between women and men in terms of salaries, developing mechanisms to identify, correct and combat salary discrimination, and fostering the necessary conditions.
The regulation is aimed at the employment relations regulated in the Workers’ Statute, so it will be applied to all the ordinary and special employment relations.
Article 28.2 of the Workers’ Statute (its amendment entered into force on 08 March 19) states that all companies must keep a salary register of all their workforce, including managerial and senior positions. In this case, I understand that the salaries of the directors or members of the board of directors should not be registered as a result of the exclusion set out in article 1.3 of the Workers’ Statute regarding the directors or members of the board of directors of the companies taking the legal form of corporations and provided that such activities in the company only involve the performance of tasks inherent to that position. The register is aimed at ensuring equal pay transparency in a faithful and updated way and providing appropriate access to the companies’ salary information regardless of their size by drafting a breakdown of their average data.
Therefore, the register must include the average values for the salaries, salary bonuses and non-salary items of the workforce, broken down by gender and set out in accordance with article 28.2 of the Workers’ Statute.
How can this be done? To draft the salary register, we must duly provide a breakdown of the arithmetic mean and median by gender of the annual gross amount that is received by each professional group, professional category, level, position or any other applicable classification system established by the company. That information must also be broken down based on the nature of the remuneration, including the base salary, all the salary bonuses and all the non-salary items, differentiating each amount.
Regarding the workers’ access to the salary register, the regulation states that, if the workers do not have legal representation, the information provided will not be the average data for the effective amounts of the items included in the register, but the percentage differences regarding the average amounts for men and women, broken down based on the nature of the remuneration and the applicable classification system.
If the workers have legal representatives at the company, the workers will access the salary register through them and be entitled to know its full content.
The workers’ legal representation must be consulted at least ten days before drafting the salary register and any subsequent amendments.
What period must be referenced in the register? In this case, the register will refer to one calendar year (from 1 January to 31 December), notwithstanding any necessary amendments if there are substantial changes or alterations in any of the items included in the register. Here I understand that the legislator aims to maintain the register updated every month since it will change every time the salary is paid, except for companies that do not change the salary and maintain the same staff and in the same number.
What will be the format for the register? Article 5.5 of Royal Decree 902/2020 states that the format set out in the official websites of the Ministry of Labour and Social Economy and the Ministry of Equality can be used.
To end this section, if the salary register shows a difference of 25% or more in the average salaries paid to its female workers compared to its male workers, referring to the total wage bill or to the average of the amounts paid, the companies with at least 50 workers have a further obligation, i.e. they must justify the difference for reasons other than the gender of their workers.
In short, the register must include all the amounts received by the workers, whether they are salary or non-salary items, differentiating by gender, professional classification, and composition:
- Salary bonuses.
- Non-salary items.
Each amount must be detailed separately, breaking down the remuneration data by professional group, professional category or position of a similar nature or equal value, with the objective that, the greater the detail, the simpler the comparison, so the reasons for the pay gap can be identified and corrective measures can be sought.
Once we have such data, we can seek and show only the arithmetic means and medians of the amounts received by the workers. The mean is the average of all the values, i.e. the quantitative salary items divided by the number of people comprising such data, while the median is the amount in the middle of a group of people, i.e. if there are ten people in a professional group, the amount is that provided by number five.
- Equal pay audit
The companies that draft an equality plan (whether they are required to do so) must include an equal pay audit in that plan. Therefore, that obligation is only linked to the equality plans already drafted by the companies, even if they are not required to do this, or which are required to draft them.
The obligation to draft equality plans is for companies with 50 workers or more, although there is a transitional period whereby:
- Companies with between 150 and 250 workers on 8 March 2020 are required to have drafted an equality plan.
- Companies with between 100 and 150 workers, on 8 March 2021.
- Companies with between 50 and 100 workers, on 8 March 2022.
The concept of an equal pay audit is targeted to companies that draft equality plans, which must include an equal pay audit. The purpose is to obtain the necessary information to check whether the company’s remuneration system fully complies in a cross-sectional way with the effective implementation of the principle of equality between women and men in terms of salaries. It must also define the needs to avoid, correct and prevent existing obstacles and difficulties or those which may exist with the aim of ensuring equal pay and transparency and monitoring that remuneration system.
Its validity will be the same as that detailed in the equality plan, unless a smaller period is set out in that section.
Content: the audit requires prior analytical work, which is linked to the salary registers that the companies are required to have, so that this can be analysed and expanded upon with the aim of diagnosing the points set out below.
Article 8 of Royal Decree 902/2020 states that the equal pay audit implies a number of obligations for the company:
- Job assessments, in accordance with article 4 of that Royal Decree, whereby the salary register already differentiates the nature of the workers’ functions or tasks; their education, i.e. their qualifications; their professional and training conditions; and the working conditions so that they can perform their activity. Therefore, the job assessments are aimed at making an overall estimate of all the factors involved or which may be involved in a job and giving a score or numerical value to the job. The assessment must refer to each task and function of each job at the company.
- The importance of other factors which lead to salary differences, and any potential deficiencies or inequalities noticed in the design and use of the company’s work-life balance and shared responsibility measures, or the difficulties encountered by workers in their professional or financial promotions arising from other factors such as discretionary business actions.
As a result, an action plan should be established to correct salary inequalities, setting out the objectives, specific actions and timelines and designating the persons to implement and monitor it.
In collaboration with the most representative trade union and employer organisations, the Institute for Women and Equal Opportunities will draft a technical guide with indicators for conducting the equal pay audits.
A job assessment procedure will also be approved through an order issued at the joint proposal of the Ministry for Labour and Social Economy and the Ministry for Equality within six months of the entry into force of Royal Decree 902/2020 (ending on 14 April 21).
- The penalties for not keeping a salary register
Failure to comply with the obligation to keep a salary register is classified as a serious breach under Royal Decree 6/2019 of 1 March, on urgent measures to ensure equal treatment and opportunities between women and men in employment and occupation, in accordance with article 7.13 of the Act on Employment Breaches and Penalties.
Broadly speaking, the minimum penalty is €751, and the maximum is €7.500.
The company can also be penalised for keeping a salary register with wrong or incomplete information, not complying with the business duty of submitting the salary register to the legal representatives of the company’s workers, not submitting the register or audit to the negotiating committee for the equality plan, or not complying with the notice of at least ten days for the prior consultation with the workers’ representatives regarding the drafting of the salary register.
We remind you of the obligation to draft equality plans, without forgetting the salary register and the equal pay audit. For 2021, the companies required to have an equality plan, which must be implemented as from 8 March 2021, are those with between 100 and 150 workers.
We also inform you that our Employment Law Department specialises in drafting equality plans and the mandatory salary register. Contact us.
This article was published on The Local, read it here.